Not all homeowners can (or want to) go the traditional route of selling their home. extenuating circumstances can force sellers to go a more unconventional route, like a short sale or selling direct. But what are these options, and who are they for?
Short Sale vs Direct Sale
A short sale is when the bank accepts a payoff that is less than the balance of the loan. Put in other terms, a seller is short the amount of cash needed to repay the lender, so the lender agrees to short sale in an effort to get back some of the lost money. Oftentimes, homeowners short sale to prevent a foreclosure or when they are in default, but this certainly is not always the case.
A direct sale is when you sell your house to an investor or investment company for cash. There is an immediate payout and it avoids the traditional home selling process, which can take an extensive amount of time and cost you in realtor fees. A direct sale is not to sell a home at less than the loan balance like a short sale, but if you aren’t careful, it can result in getting less money than the home is worth. When selling direct, your best bet is to check with Ryan’s Buying. This direct buyer offers the most for your property and is honest and fair.
Benefits of a Short Sale
Short sales can provide financial benefits, such as saving on traditional home sale fees, which will be paid by the bank. Your credit score will probably be damaged, but it will still be saved from the decline it would experience under a foreclosure. If you are facing foreclosure, selling your home in a short sale may be the best option available. There are other scenarios that lead to a short sale, too, such as if you owe more on your home than it is worth in value.
What Can Go Wrong
Sometimes, short sales simply aren’t possible. Some servicing guidelines require that the home be occupied for a short sale, as some banks require seller contributions no matter the financial state of the seller. These barriers restrict some sellers from executing a short sale.
The actions of others can also unfairly move a short sale to failure. Second lenders can push sellers to commit short sale mortgage fraud when they demand payment outside the HUD-1. Even further outside of your control is vandalism, which the bank will not pay for and can also end a short sale.
Unfortunately, even when things go right, they may still go wrong. If a seller finds a job within the time the sale is trying to get approved, they may no longer qualify. A short sale is a multifaceted and often very complex process, and may not lead to success in the majority of cases.
Benefits of a Direct Sale
If your home needs a lot of repairs, if you acquired a probate house that you don’t have the time and energy to sell, or you need to move quickly for a new job or personal situation, a direct sale might be the best option for you.
Selling direct skips any work with lenders, as buyers pay cash up front. Working with a bank will severely slow down the buying process and often lead to clauses or bumps where most failing sales unravel. A direct sale can help you get a house off your hands quickly and easily.
What Can Go Wrong
Unfortunately, skipping the process with lenders and real estate agents can open up the door to scammers. Investors don’t need a license to operate—anyone can do it and end up putting you in a helpless position. Sellers who make a direct sale should keep a close eye on their credit to make sure another mortgage was not taken out on their home, and should rarely, if ever, work with a company that charges an application fee. If you don’t get your house properly appraised, you may not know how much your home is currently worth and get cheated out of a proper sale price. A direct fee is only a painless process if you’re selling to someone who is credible and trustworthy.
Homeowners may find themselves in vulnerable positions—facing foreclosure, needing an immediate move, or trying to sell a house in desperate need of TLC—but that doesn’t mean they are out of options. Although short and direct sales aren’t for everyone, they can certainly help out in specific situations that require sellers don’t go the traditional route. If you feel you are in one of these situations, talk to your lender or another professional as to whether a short sale or direct sale is a viable option for you.